4/23/2018
GREATER INCLUSION OF DOMESTIC COMPANIES IN THE LOCAL AND REGIONAL SUPPLY CHAINS WITH THE OBJECRTIVE TO MAXIMIZE THE EFFECTS OF THE FOREIGN DIRECT INVESTMENTS IN THE COUNTRY

The Conference for strengthening the cooperation between foreign companies and local companies that have the potential to become their suppliers, organized by the Foreign Investors Council, together with the Faculty of Mechanical Engineering within the SS. Cyril and Methodius University in Skopje took place on 20.04.2018 in Holiday Inn in Skopje.

The event is within the Project "Increasing the competitiveness of the domestic small and medium enterprises with the objective to improve their cooperation with foreign investors" with duration of 24 months and is financed by EU funds within the Instrument for Pre-Accession Assistance (IPA) and is implemented in partnership with the Vienna University of Technology- Institute for science management and is supported by the Republic of Macedonia that committedly encourages this kind of cooperation.

The benefits of the foreign investments in one country are first and foremost a direct opening of new jobs and generating income, increasing of the export and its diversification, inflow of foreign capital, creating added value and more extensive positive effects for the overall economy in which they function.

However, the strategy of the country for attracting foreign direct investments should be followed by an ambitious strategy for the support of small and medium enterprises (MSEs), particularly of those domestic companies that have the potential to be their local suppliers with the objective to maximize the benefits of the work of multinationals in the country. By strengthening the integration with the domestic entities the positive effects of their work increase with the final goal of achieving a more balanced economic development and greater competitiveness of the national economy.

Apart from the progress achieved in the attraction of export-oriented foreign direct investments, the capability of local SMEs to be further integrated into the supply chain of the global FDIs in the country is limited, first and foremost by their relatively low level of productivity, corporate skills, technology capacities, business sophistication and some other aspects of the business environment on a local level.

The results of some researches show that the amount of the total procurements of the companies from the industrial zones by entities from the domestic market in 2014 and 2015 is about 45 million euros, while in 2016 that amount was about 33 million euros with a tendency of medium and long term increase.

At the protocolar part of the conference, in front of the audience full with foreign investors in the county and representatives of the domestic companies interested in the cooperation with them, professor Kocho Angjushev, PhD, Deputy Prime Minister of the Government of the Republic of Macedonia responsible for economic affairs and for coordination of economic institutions, Mr. Stefan Peter, president of the Foreign Investors Council, Professor Darko Danev, PhD, dean of the Faculty of Engineering in Skopje and professor Robert Minoveski, PhD, had an address at the event.

Avram Stojchevski, Director of Van Hool Macedonia and chairman of the Association of the automotive industry within the Foreign Investors Council was moderator of the event.

"The Government of the Republic of Macedonia has a clear idea about the situation regarding this issue and for us to solve this problem we should precisely define the circumstances and to believe the numbers- and that shows that the overall procurements of the companies of the free zones from the domestic companies is about one percent. The cooperation is most often based on using security, catering services, maintenance, utilities and very little on the production process"- stated professor Kocho Angjushev, PhD, Deputy Prime Minister of the Government of the Republic of Macedonia. On the other hand, we have to understand the essence and nature of FDIs in the country: the foreign companies in the free zones, generally, perform centralized procurement of raw materials and basic components for their products, from known and already traditional partners and finding new local suppliers for them would mean additional costs and long-term investments. Some foreign companies in the zones that make final products, as Van Hool Macedonia, have greater space to choose from domestic companies that would be included in their local supply system.

As the Deputy Prime Minister Angjushev, the Government of the Republic of Macedonia will provide support to the both sides, FDIs will be stimulated to increase the procurements of products and services from local SMEs, while the local companies to introduce new technologies and innovative processes in the production via the new measures incorporated in the Plan for economic growth that are equal both for foreign and domestic companies.

At the end, Kocho Angjushev, PhD, stated that the negotiations with 30 new foreign investors are finalized for which agreements are to be signed for their investments in the Republic of Macedonia.

"We have the same opinion as the Deputy Prime Minister Angjushev on this topic and that is that the foreign investors should be more open and more flexible, while the domestic investors should be braver in the approach to the foreign companies and to work on their specialization and modernization"- stated Stefan Peter, MSc., President of the Foreign Investors Council within the Economic Chamber of Macedonia. The cooperation for the domestic companies will mean more work and development, transfer of knowledge and new technologies, new standards, as well as increased competitiveness and, of course, a possibility for exporting to foreign markets.

Therefore, the Macedonian companies should work more in the direction of the intensifying the cooperation with the foreign companies that work in the country, to be more aggressive and to impose to the foreign companies, first and foremost with quality products, competitive prices and having the necessary quality certificates. "The business does not come to your office, but you should go to the FDIs and offer your products and services"- said the President of the Council. You should have a professional sales team that knows how to sell your product or service and knows how to study the requests and needs of the clients. The needs of the clients should be heard, more exactly you should know what they need. The magic triangle of successful cooperation that should be respected by both foreign and domestic companies is composed of three factors: quality, price and delivery time- stated Peter. 

Robert Minovski, PhD, leading partner and professor at the Faculty of Mechanical Engineering in Skopje presented the key points and objectives of the Project, as well as the results of the recent survey implemented between the foreign investors.

The next stage is the implementation of a research on the performances of the domestic companies regarding their production and technical capacities, the level of productivity, financial, management and human resources for preliminary selection of 20 local suppliers that have the potential to become local partners of foreign companies.

Tomash Sobotka, PhD, from the Vienna University of Technology, Republic of Austria, talked about the technical assistance and the international expertise that will be offered via the Project to the local companies interested in increasing their sophistication with the objective to be integrated into the global and regional supply chains of the big foreign companies located in and outside the technology and industry development economic zones (TIRZ) with their products and services.

A special interest with the guests of the event was caused by the success stories of joint cooperation between some of the foreign investors in the country and domestic suppliers, presenting the way that should be taken so that these partnerships are sustainable and successful for a long period. Representatives of Van Hool, Arcelormittal and Comfy Angel on one side and Uniplast and Mondo on the other transferred their experiences from the beginning to the end of the process of establishing cooperation, from the initial contacts, through the negotiation process and the promotion of the production and investing in new technologies to meet the criteria of the foreign partner, to the first trial shipments and building mutual trust and successful cooperation until now.

At the last panel discussion representatives of the Fund of innovations and technology development, the European Bank for Reconstruction and Development (EBRD), the World Bank- office in Skopje, the Macedonian Bank for Support of Development and USIAD Macedonia, promoted the instruments and programs for the support of local small and medium enterprises for strengthening their capacities with the objective for them to become local suppliers of foreign direct investors.

Vlatko Stojanovski